The Raleigh Housing Authority is dropping plans to remove 60 public housing units from the federally funded Capitol Park community north of downtown, citing potential rule changes in Washington.

Authority director Steve Beam said he received word about the policy changes from the U.S. Department of Housing and Urban Development shortly after the Raleigh City Council signed off on the Capitol Park sale.

“They’re in the process of rewriting the disposition regulations” for public housing properties, Beam said. “That plan at this point is dead until there’s a rewrite.”

The housing authority proposed the change to help pay for the redevelopment of another public housing community, Walnut Terrace. But the N.C. Justice Center, UNC Center for Civil Rights and other organizations filed a complaint with HUD, saying the move would “diminish the efforts” to house Raleigh’s poorest residents.

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Beam had planned to sell the 60 public housing units for $300,000 – a fraction of the assessed value –to its nonprofit affiliate, which would rent them at market rates of up to $1,100. Public housing residents wanting to stay would be given Section 8 vouchers to keep their homes.

HUD likely won’t issue new rules for selling public housing for one to five years, Beam said. “We’ll evaluate it at that point,” he said. “We don’t know what the rules will say.”

Community leaders concerned about the change at Capitol Park welcomed the news.

“I think HUD needs to look at it, because at the end of the day they’re converting ($29 million in) Hope VI grant proceeds and doing something that may not be consistent with the original proposal,” said Danny Coleman, who chairs the South Central Citizens Advisory Council.

The potential change in HUD policy won’t affect the housing authority’s plan to sell 115 single-family homes throughout Raleigh used as public housing. That – another effort to generate funding for the Walnut Terrace redevelopment – received federal approval in 2011.

The sales will eliminate half the 224 houses the housing authority purchased in the 1990s using federal grant money. Each house was purchased in a neighborhood classified by HUD as “non-minority, non-poverty.” Residents were required to be fully employed, disabled or elderly, and had a decade to find other housing.

“It was never the intent of RHA to keep these homes forever,” the housing authority’s Allison Hapgood wrote in a March 25 recent memo. “They are scattered widely around the community and can become costly to maintain. This is a significant drain on staff time and vehicles.”

Hapgood said the agency is waiting until residents move out to put the houses on the market. She hopes to secure a Section 8 rental voucher for each lost unit of public housing, but HUD hasn’t issued any yet.

Since 2012, about 100 homes have gone on the market, and 88 have sold. That’s generated $9.6 million to help pay for Walnut Terrace, where 300 barracks-style public housing apartments will be replaced by 145 public units and 147 market-rate homes.

The plan to sell the houses garnered a letter of support from then-Mayor Charles Meeker when it was first proposed in 2010. Meeker, a Democrat, is now mulling a run for governor in 2016.

“The city appreciates that RHA is making contingency plans for redeveloping Walnut Terrace to ensure this site does not sit vacant for an extended period of time,” Meeker wrote in August 2010. “Walnut Terrace is immediately adjacent to the southern entry into the downtown business district and the redevelopment of this site will have a significant positive impact on this area.”

Coleman said he and other community leaders were never informed about the plan to sell houses. “That was all down low,” he said. “Charles was giving them the green light.”

Coleman said the housing authority and its allies in city government need to be more transparent and allow the public to weigh in on major changes to public housing. He said Beam should have delayed development at Walnut Terrace until he could fund it without severely reducing the city’s supply of public housing.

“The city council and the Raleigh Housing Authority need to reaffirm their commitment that Raleigh Housing Authority is going to serve the hardest-to-house population group,” he said.